New Commission President Jean-Claude Juncker has repeatedly stressed his ambition of an unprecedented €300bn package for growth and investment, to be delivered over the next three years. The plan will be unveiled by him in early December, and the EU Council in December shall decide on it. However, it still remains unclear where the money will come from. In the meantime DG Energy Director General Dominique Ristori has claimed a part of the cake for energy efficiency. How would EURELECTRIC see the priorities in the energy sector? Some evidence from our statements and positions.
In 2012 and 2014 EURELECTRIC published two reports on investments: one on investments in the liberalised power sector, stressing regulatory uncertainty as a major obstacle to investments as well as distortions. The other one, ‘Electricity Distribution Investments – what regulatory framework do we need’ focused on distribution grid investments and the needed changes there. Both reports clearly underline regulatory risk as a major hindrance to investment and ask for policy improvement. Combining both of them in one picture provides a strong view on how investments in the full electricity value chain should be unleashed.
The €300 billion investment plan is a Keynesian answer to current deflation risks. And indeed, major investments in infrastructure of all kinds are needed, even more so when they are cross-border and European and the cost benefit analysis becomes more complicated.
Jyrki Katainen, the newly appointed Commission Vice President for Jobs, Growth, Investment and Competitiveness, will play an important role in the 300bn plan. A task force shall be created, according to the European Council on 23-24 October, which will unite the EIB, Commission and member states and assess current investment bottlenecks.
Where will the money come from, and for which purpose should it be used? Juncker wants to collect national and EU money, rely on a kind of ‘crowd funding’, benefit also from low interest rates (for financing the rest), and stimulate public private investments. Innovative financial instruments shall be developed, and the EIB shall play a central role, seeing the institution’s capital increased. As for the question whether this 300bn package is a repackaged version of existing projects and allocations, there is indeed limited space for manoeuvre on any new tools as the next budget review will take place only by 2016. And it is also quite improbable that a large amount of money will come from the public sector.
Considering the above it is likely that the package will include regulatory incentives for investments as well as risk sharing facilities. This indeed would support innovation – as many technologies fail in the ‘valley of death’ from first-of-it- kind to market introduction and market uptake (see EURELECTRIC's innovation action plan).
EURELECTRIC will share its innovation as well investment studies with the Commission and submit a combined view of the investment incentive needs for both regulated and unregulated parts of the power sector.